Q: How are an injured worker's Iowa
average weekly wage (AWW) and a weekly compensation rate
calculated?

A: This covers the basics of AWW and rate calculation for an
adjustor. Each situation is different and each calculation should be
adjusted per the injured worker's situation and case law.

First look to
Iowa
Code
§85.36 and Iowa
Workers' Compensation Manual/Rate Book, Weekly Benefits (D), and speak with
the employer to determine how the employee earned their wage. For
example, an employee paid on an hourly basis would have their AWW
calculated under §85.36(6), while §85.36(5) would be used
for an employee who is paid on a yearly salary.

You also need to
know if the employee is single or married and how many dependents
(including the injured employee and their spouse) they had
at the time
of the injury. For example, a married employee with 3 dependent
children is M5. Also, note, additional exemptions for blindness and
old age are included (§85.61(6)(a)). Use the maximum number of
exemptions that the employee could have taken on their tax return at
the time of the injury.

It is generally a
good idea to request a year of wage records, if applicable, preceding
the injury date for two reasons. First, pursuant to §85.40, the
employer is required to provide this information to the injury
employee upon demand, and you should have it on hand to provide if
this request is made. Second, if the employee is paid hourly, you
will, probably, need more than the 13 immediately preceding weeks
because, often, weeks need to be excluded as unrepresentative,
requiring you to go back another week or more.

If the employee is
an hourly worker (regardless of interval at which checks are written,
weekly, biweekly, monthly or semimonthly) you will need to know hours
worked each week, both regular and overtime, rate(s) of pay, whether
regular bonuses were paid, and whether the employee had time off for
vacation, sick, holiday, or other personal leave during any week.
Since you will be doing a 13 week average, the pay periods need to be
broken down weekly, to help you decide which weeks are
representative, and which do not fairly reflect the employee's
customary earnings and need to be excluded. Be sure the employer
includes any pay increases and their effective dates. You may need
actual time cards.

You will not use the
week of the injury, but will start with the week immediately
preceding. Count back until you have 13 representative weeks. If the employee was
absent from employment for reasons personal to the employee (such as
vacation, holiday or sick leave) during part of the thirteen calendar
weeks preceding the injury, the employee's weekly earnings will be
the amount the employee would have earned had the employee worked
when work was available to other employees, of the employer, in a
similar occupation. However, a week which does not fairly reflect the
employee's customary earnings shall be replaced by the closest
previous week with earnings that do. Include overtimehours at straight time rate of pay (effective
7-1-08 any
shift
differential pay is also included). Include regular bonuses if they
fall within your 13 weeks. If the bonus is an annual one, divide by
52 and add this amount to each of the thirteen weeks. Whether to
divide an annual bonus by 13, or 52, is an issue on appeal as of this writing. Take
total the wages (hourly rate multiplied by total hours worked, at
straight time, plus regular bonuses) and divide this number by 13 and
round up to the nearest dollar, for the AWW.

If the employee is
on a yearly salary, you will use his yearly earnings, and will divide
these by 52.

If the employee
either earns no wages, or less than the usual weekly earnings of a
regular full-time adult worker, for example a part-time employee, you will use this
employee's total earnings from all employment for the 12 calendar months
preceding the injury and divide by 50. The provision to Include
overtimehours at straight time rate of pay, may apply, although the issue is
on
appeal as of
this writing.

The recently
hired
employee is covered under §85.36(7). Various methods of
calculating an AWW are covered under §85.36.

Once you have the
AWW and have double checked your calculations, use the Iowa
Workers' Compensation Manual/Rate Book for the year of the injury, noting
that effective years run July 1 through June 30, to find the
rate.

Remember that,
although, this seems like a moving target, "§85.36 is to be
applied flexibly, rather than mechanically or technically, with the
ultimate objective being to fairly reflect the employee's earning
loss."Daniels
v. T&L Cleaning Services, File 1283486 (2003).